Humble & Fume Announces Completion of US$8 Million Private Placement to Advance Expansion into Cannabis Distribution in the United States

• US$8 million private placement by Green Acre Capital Distribution Corp. to acquire 15.23% of Humble, with an LOI to complete definitive agreements for an additional US$2 million for the formation of a joint venture
• LOI to provide for a further US$10 million of additional capital on a non-dilutive basis to bring Green Acre's interest in JV to 50%
• Funds will be used to execute on Humble's expansion strategy of cannabis distribution operations in California
• Both investments funded, or to be funded, by a subsidiary of Johnson Brothers through the purchase from Green Acre of options to acquire both of Green Acre's investments

TORONTO, Nov. 15, 2021 /PRNewswire/ - Humble & Fume Inc. (CSE: HMBL) ("Humble" or the "Company"), a leading North American distributor of cannabis and cannabis accessories, announced today that it has completed a US$8 million private placement from Green Acre Capital Distribution Corp. ("Green Acre") for 18,795,471 common shares at a price of CDN$0.53 per share, representing 15.23% of the issued and outstanding common shares of Humble following completion of the private placement (the "Humble Equity"). Green Acre also intends to invest an additional US$2 million to form a Joint Venture ("JV") with Humble focused on accelerating the Company's expansion into cannabis distribution operations in California.

Green Acre received funding for the private placement by entering into an option agreement ("First Option") with Johnson Brothers, a leading wine, spirits, and beer distributor. Johnson Brothers purchased its rights under the First Option from Green Acre for US$8 million. Pursuant to the terms of the First Option, Johnson Brothers has the right to acquire the Humble Equity for nominal consideration once cannabis has been sufficiently federally legalized in the United States so that an equity investment by Johnson Brothers in Humble will not adversely impact United States federal and state beverage alcohol licenses held by Johnson Brothers or any of its subsidiaries or affiliates.

Humble and Green Acre also intend to establish the JV which will engage in the business of cannabis distribution in the United States, initially in California. The JV will be funded through aggregate capital contributions of US$10M - US$8M to be provided by Humble using the private placement funds and US$2M by Green Acre. As a result, the JV will be owned 80/20 by Humble and Green Acre, respectively. Green Acre also acquired the right to increase its ownership in the JV to 50% by investing up to an additional US$8M over the next two years. Similarly to the private placement, Green Acre's interest in the JV would be funded by Johnson Brothers in accordance with a second option agreement ("Second Option") pursuant to which Johnson Brothers would have the right to acquire, initially for US$2M, Green Acre's interest in the JV on the same terms and circumstances, including U.S. federal legalization of cannabis, as the First Option. Green Acre will then have an opportunity to increase its ownership in the JV to 50% by investing up to an additional US$8M over the next two years. Green Acre would make this investment by selling additional options to Johnson Brothers giving Johnson Brothers the right to acquire Green Acre's additional interests in the JV.

"This investment by Johnson Brothers, through their Green Acre option agreement, is a pivotal milestone for our expansion into the United States. Johnson Brothers is known for their operational expertise in the distribution of beverage alcohol in the United States," said Joel Toguri, Chief Executive Officer of Humble. "We are actively executing on our growth strategy, which includes the previously announced agreement to acquire licensed California cannabis distributor, Cabo Connection. As our business evolves and expands, we continue to be hyper focused on sustainable profit generation and positive cash flow to deliver long-term shareholder value."

"Johnson Brothers is excited about the future of Humble & Fume and its expansion strategy of cannabis distribution operations in the U.S. states where it's allowed." said Mark Hubler, President of Johnson Brothers.

Other Terms

In addition to the exercise rights pursuant to the First and Second Options ("Options"), Johnson Brothers will have the right to terminate the Options if Johnson Brothers determines in good faith that it is not advisable for Johnson Brothers to continue to hold the Options for regulatory or legal reasons applicable to Johnson Brothers or its business. In the event of any such termination, Green Acre will, within 90 days, liquidate the securities subject to the Options and remit the proceeds to Johnson Brothers. Both Options will expire on December 31, 2036.

Green Acre is an insider of Humble, and therefore the subscription for the Humble Equity is a "related party transaction", as such term is defined under Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions. The Issuer is relying on exemptions from the formal valuation and minority approval requirements set out in MI 61-101. The company is exempt from the formal valuation requirement of MI 61-101 under sections 5.5(a) and (b) of MI 61-101 in respect of the transaction, as the fair market value of the transaction, insofar as it involves the interested party, is not more than the 25 per cent of the company's market capitalization. Additionally, the company is exempt from minority shareholder approval under section 5.7(1)(a) of MI 61-101, on the same basis as the foregoing.

Pursuant to the terms of a subscription agreement for the Humble Equity, Green Acre has acquired control of an aggregate of 18,795,471 common shares of Humble, representing approximately 15.23% of the outstanding common shares, and together with its current holdings, Green Acre and its Affiliates (the "Green Acre Entities") will control an aggregate of 36,425,463 common shares of Humble representing approximately 29.52% of the total issued and outstanding common shares of Humble (in each case above, including the Humble Equity).

The Green Acre Entities acquired the Humble Equity in connection with the entering into of the Options, and may, depending on market and other conditions, increase or decrease its beneficial ownership, control or direction over securities of Humble, through market transactions, private agreements, treasury issuances, exercise of warrants or otherwise, including in accordance with the terms of the Options.

The Green Acre Entities' head office is located at 2 Bloor St. W., Suite 1805, Toronto, Ontario, M4W 3E2. Green Acre is formed under the province of Ontario and its principal business is investments. A copy of the Early Warning Report will appear under the profile of Humble on the SEDAR website at www.sedar.com. Humble's head office is located at 135-1135 Dundas St East, Toronto Ontario, M4M 3P1.

For further information or to obtain a copy of the Early Warning Report, please contact: Matt Shalhoub, 416-639-9690 or [email protected].

About Humble & Fume, Inc.

Humble & Fume, Inc. is a leading North American distributor of cannabis and cannabis accessories, supported by a customer-centric sales team and strong fulfillment infrastructure. As the only fully-integrated cannabis distribution solution, Humble bridges the gap for retailers, licensed cannabis producers, multi-state operators, and cannabis consumers to maximize sales penetration, and increase financial performance. With over 20 years of North American operating experience, Humble has cultivated extensive vendor and customer relationships, distributing premium cannabis consumables and consumption devices. The Company is comprised of four subsidiaries that represents its vertical integration across North America; B.O.B. Headquarters Inc. / Humble+Fume, Windship Trading LLC, Humble+ Cannabis Solutions and Fume Labs Inc.

About Johnson Brothers

Johnson Brothers Liquor Company is a family-owned wine, spirits, and beer distributor with headquarters in St. Paul, Minnesota. The company has been servicing its customers throughout the United States since 1953. To learn more about their story, services, and locations, please visit www.johnsonbrothers.com.

About Green Acre Capital

Green Acre Capital is a private investment fund that is exclusively dedicated to making cannabis investments globally. GAC has raised in excess of $100 million to deploy across the cannabis value chain. With two current funds GAC is one of the longest tenured and most active private investors in the industry.

Forward-Looking Information and Statements

This news release contains "forward-looking information" within the meaning of applicable securities laws relating to, the Company's assessment of the cannabis edibles market in Canada, the demand for cannabis edibles in Canada and the expected results for brand partners of the Company. Any such forward-looking statements may be identified by words such as "expects", "anticipates", "intends", "contemplates", "believes", "projects", "plans" and similar expressions. Readers are cautioned not to place undue reliance on forward-looking statements. Statements about, among other things, the potential impact on brands that engage Humble for their distribution and / or sales agency and the future of the cannabis edibles industry including the anticipated ongoing consumer demand, are all forward-looking information. These statements should not be read as guarantees of future performance or results. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance, or achievements to be materially different from those implied by such statements. Although such statements are based on management's reasonable assumptions, there can be no assurance that such forward-looking statements will occur as described herein. The Company assumes no responsibility to update or revise forward-looking information to reflect new events or circumstances or actual results unless required by applicable law. Readers are encouraged to refer to the Company's disclosure available on its SEDAR profile (at www.sedar.com) for information as to the risks and other factors which may effect the Company's business objectives and strategic plans.

SOURCE Humble & Fume Inc.

Related Links

https://humbleandfume.com/